Problem G PROBLEM -STATEMENT ANALYSIS Condensed data taken from the balance shee

Question

Problem G PROBLEM -STATEMENT ANALYSIS Condensed data taken from the balance sheet at the end of the current year are as follows Assets Cash Marketable securities Accounts receivable Merchandise inventory Prepaid expenses Fixed assets (net S 300,000 125,000 275,000 1,200,000 76,000 2,000,000 Accounts payable Notes payable (short-term, non-interest-bearing) Accrued liabilities Bonds payable, 10%, due in 2013 Preferred 9% stock. S50 par Common stock, $20 par Paid-in capital in excess of par--common stock Retained earnings.... $ 400,000 250,000 100,000 2,000,000 500,000 300,000 100,000 326,000 Selected data related to the 12 months of the current year indicate the folliowing Average accounts receivable Average common stockholders' equity Average stockholders' equity Average total assets Cash dividends paid on common stock... Income before income tax Interest expense Net income Net sales (on account) $ 300,000 700,000 1,200,000 3,400,000 111,000 300,000 50,000 250,000 2,000,000 The common stock was selling for $75 per share at the end of the current year INSTRUCTIONS: Compute the analytical measures listed below, rounding to one decimal point, and insert the answers in the Answers column For ANALYTICAL MEASURES 2.8 0. 0. Ratio of fixed assets to long-term liabilities 1. Quick ratio 2. Current ratio 3. Working capital 4. Accounts receivable turnover 5. Rate earned on total assets 6. Rate earned on common stockholders' equity 7. Number of times interest charges earned 8. Earnings per share on common stock 9. Price-earnings ratio on common stock 6. 10. Dividend yield on common stock

Explanation / Answer

8) Earnings per Share on Common Stock :-

= Net Income After Preferred shares Dividend / No. of Common Stock

= ($250000-($500000*9%)) / 15000 shares

= ($250000 - $45000) / 15000 shares

= $205000 / 15000 shares

= $13.67 per share

9) Price Earning Ratio on Common Stock :-

= Market Value Price Per Common Share / Earning per share

= $75 / $13.67

= 5.49 times

10) Dividend Yield on Common Stock :-

= Cash Dividend Per Common Stock / Market Price Per Common Stock

= ($111000/15000) / $75

= $7.4 / $75

= 0.0987 or 9.87%

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